Have you bought a coffee or paid a bill recently? If you used a card, there's a fair chance you were slugged with surcharge.
Paying a few extra cents or dollars on each transaction might not seem like a big deal, but these costs add up.
According to analysis based on Reserve Bank of Australia (RBA) data, Australians are losing nearly $1 billion each year from card surcharges.
While they are banned in some places, such as the UK and the European Union, they are legal in Australia.
Lately, I've noticed more retailers adding an extra cost at the check-out, particularly smaller shops and cafes.
With that in mind, here are some ways you can reduce or avoid these extra charges.
Consider paying in cash
The simplest way to avoid card surcharges? Pay cash.
While businesses can charge a surcharge for paying with a credit, debit or prepaid card, they can't charge you more than the advertised price if you're paying in cash.
It can be a good way to save, particularly for larger purchases.
If you can avoid a surcharge of 1 per cent by paying in cash, you'd save $10 on a $1,000 purchase.
Keep in mind that some businesses don't accept cash and there's no requirement for them to do so.
However, if the business only accepts card payments, and there is no way to avoid paying a surcharge, the ACCC says the extra cost needs to be included in the advertised price.
For bills and other scheduled payments, paying via bank transfer or BPay may help you avoid extra fees.
You might save on surcharges by swiping or inserting your card
If you use a debit card, it's likely a "dual network" card, meaning it can be used to make payments via the Mastercard/Visa network (depending on the issuer) as well as the eftpos system.
Using the lower-cost eftpos system can help reduce card surcharges and sometimes avoid them completely.
To do this, you typically swipe or insert your card and pay using the "savings" option.
Keep in mind that businesses can still add a surcharge for eftpos payments, but it may be lower than for other card types.
Some bank cards can use eftpos when tapped rather than Visa/Mastercard's more expensive system, which can reduce surcharges without the need for inserting your card.
If you prefer to pay via your phone or other device, you may also be able to change the settings in your digital wallet to use eftpos for tap payments.
While this is a handy feature, it's not available on many cards and digital wallets, so it's good idea to check with your card provider first.
Thankfully, there has been some progress that might make paying on eftpos less fiddly.
The RBA is working to implement "least-cost routing" (LCR) — a system that ensures payments are processed using the lowest-cost network by default.
While many payment providers have implemented LCR already, it's not available everywhere yet.
Do businesses need to tell you if there's a surcharge?
The ACCC says card surcharges should be disclosed to consumers "at the earliest possible point before consumers make their order or purchase".
"Under the Australian Consumer Law, all businesses must display clear and accurate prices, and must not mislead consumers about their prices," an ACCC spokesperson told the ABC.
"This includes being clear and up-front about any additional costs that might apply, as well as when an additional charge is optional, or can only be calculated contingent on certain information customers need to provide during the transaction."
It's common for businesses to have a sign at the point of payment — sometimes even on the payment terminal itself. Other businesses may choose to disclose surcharges on their price lists or menus, for example.
What is the average surcharge for a card payment?
Card surcharges "must not be more than what it costs the business to use that payment type".
The ACCC have published estimated average costs for different card payment types:
- Eftpos: less than 0.5 per cent.
- Visa and Mastercard debit: between 0.5 per cent and 1 per cent.
- Visa and Mastercard credit: between 1 per cent and 1.5 per cent.
Some business may also opt to set a fixed surcharge (such as 10 cents per transaction) or add a surcharge to payments under a certain dollar limit.
Both approaches are allowed, however if a business charges a flat fee, the ACCC says it can't be more than the costs the business incurs for using that payment type.
What to do if you're hit with an excessive surcharge
If a business is charging an excessive surcharge, the ACCC suggests first contacting the business to try to resolve the problem.
A surcharge is considered excessive if it's more than the costs paid by the business to process the payment.
If you feel you have been overcharged, and you can't resolve the issue with the business, you can lodge a complaint with the fair-trading body in your state or territory.
You can also report an excessive surcharge to the ACCC, which has the power to issue infringement notices and other penalties.
However, the ACCC is not a complaints handling body and does not resolve disputes between customers and business owners.
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